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06/20/95 MARY GARCIA v. MCCORD GASKET CORPORATION

SUPREME COURT OF MICHIGAN


June 20, 1995

MARY GARCIA, PLAINTIFF-APPELLEE,
v.
MCCORD GASKET CORPORATION, (EX-CELL-O CORPORATION), AND NATIONAL UNION FIRE INSURANCE CO., DEFENDANTS-APPELLANTS, AND FIREMAN'S FUND INSURANCE CO., DEFENDANT-APPELLEE.

Before The Entire Bench (except Weaver, J.). Chief Justice James H. Brickley, Justices Charles L. Levin, Michael F. Cavanagh, Patricia J. Boyle, Dorothy Comstock Riley, Conrad L. Mallett, Jr., Elizabeth A. Weaver

The opinion of the court was delivered by: Levin

Opinion

LEVIN, J.

The question presented is whether the Worker's Compensation Appellate Commission erred in dismissing the employer's appeal for failure to pay medical benefits during the appeal. We hold that the WCAC did not err, and affirm the decision of the Court of Appeals *fn1 affirming the dismissal by the WCAC.

I

The magistrate found that Mary Garcia was totally disabled and awarded worker's compensation benefits to be paid by defendant McCord Gasket Corporation. *fn2 The order *fn3 provided that benefits were to be paid until the further order of the bureau, and that McCord shall also be "responsible for medical expenses pursuant to Section 315 *fn4 as follows: Any and all reasonable and necessary medical expenses related to plaintiff's back et sequelae."

A

As stated by the Court of Appeals, "numerous disputes relating to the reasonableness and necessityof various medical treatments followed." *fn5 A year after the award was entered in January, 1990, a "petition to stop benefits" was filed by McCord on January 8, 1991. A month later, on February 5, 1991, Garcia moved for dismissal of McCord's appeal to the WCAC from the magistrate's decision asserting that McCord had "refused and denied payment of medical benefits required by the terms of the award" *fn6 contrary to § 862(2), which provides that the filing of a claim for review of a magistrate's decision "shall not operate as a stay of providing medical benefits" awarded by the magistrate, and that medical benefits shall be paid from and after the date of the award until final determination of the appeal. *fn7

McCord responded to Garcia's motion to dismiss, stating that it had "considered all requests for payment of medical benefits and [had] paid those which were reasonable and necessary in accordance" with the magistrate's decision, and had "denied payment on other requests which are not reasonable or necessary . . . ." *fn8 McCord did not specify which "requests for payment" had been paid, and which had been denied, nor did it specify why a particular request was not reasonable or necessary.

McCord asserted that § 862(2) provides only for furnishing medical benefits "required by the terms of the award," *fn9 that the magistrate's award in the instant case "does not provide the terms by which medical benefits would be required," and that the award provided "no guidance" concerning "which medical providers and care and treatment [were] necessary or which amount was reasonable." *fn10

B

The WCAC, on June 20, 1991, ordered McCord toprovide it within thirty days "an affirmation of the bills that have been received, the date the medical services were provided, and a showing that the bills have been paid pursuant to the magistrate's order of January 22, 1989, awarding reasonable and necessary medical expenses related to plaintiff's back. Failure to provide timely compliance with MCL 418.862(2) shall subject defendants' appeal to dismissal." (Emphasis added.)

McCord did not provide the affirmation of bills received and dates medical services were provided, and did not show that such bills had been paid. Rather, McCord responded on July 17, 1991, to the WCAC order by filing a motion to remand and consolidate or hold in abeyance, stating that disputes had arisen concerning the portion of the award requiring payment of reasonable and necessary medical expenses, and stating:

What expenses or treatment are "reasonable and necessary" were not spelled out in the Magistrate's decision and, therefore, has [sic] been a matter of differing interpretation. Defendant submits that it has paid all "reasonable and necessary" expenses since the date of the Magistrate's decision.

McCord's motion noted that a hearing was scheduled for July 31, 1991, on its application for a hearing objecting to the reasonableness and necessity of the medical expenses being claimed by Garcia. The motion continued that § 315 *fn11 provides that all fees and charges for treatment were subject to the health care services rules, that those rules provide for resolving disputes between carriers and health care providers, *fn12 and that rule 1904(6), *fn13 concerning the continuation of medicalbenefits during an appeal, provides for expedited treatment accorded to sixty-day cases when a carrier files an application to stop or limit its liability. *fn14

The WCAC, on August 30, 1991, denied the motion for remand and consolidation or to hold in abeyance, and granted Garcia's motion to dismiss the appeal for failure to comply with § 862(2) and the WCAC's order of June 20, 1991. *fn15

C

The Court of Appeals affirmed the dismissal, holding that the WCAC has the implied authority to dismiss for noncompliance with § 862(2), citing this Court's decision in McAvoy v H B Sherman Co, 401 Mich 419; 258 N.W.2d 414 (1977). *fn16

The majority said that when McCord "refused to pay the medical bills as required" by the magistrate's and WCAC's orders, it subjected itself "to the possibility of a dismissal as stated in the commission's order." *fn17

One of the Judges on the panel Dissented. He said that if the only question presented was whether the WCAC, "under its implied power to enforce § 862(2)," could properly dismiss an appeal by an employer who ignores a magistrate's order requiring payment of medical benefits, he would join in the majority. He Dissented because § 315 contemplates that the employer's insurance carrier will "monitor closely medical treatment for injured workers with an eye to detecting both charges in excess of the schedules of maximum fees promulgated by the agency and any overutilization." *fn18

The Dissenting Judge said that the "problem in this case" was that the magistrate's order was not "clear enough to make apparent what medical expenses are required." It "merely recapitulates the statutory language" that obligates the employer to pay reasonable and necessary medical expenses under § 315, "albeit confining that obligation to plaintiff's back condition. The award does not indicate what particular medical treatment ought to be included, nor does it provide criteria from which it could reliably be determined by the appellants, either in advance or in retrospect, that a particular prognosticated treatment, prosthetic, or prophylactic is within the magistrate's concept of 'reasonable and necessary' medical treatment related to plaintiff's back." *fn19

II

McCord notes that § 862(2) does not expressly provide that the WCAC may dismiss an employer's appeal for failure to continue to provide medical benefits "until final determination of the appeal," and contends that it lacks such power. We agree with the Court of Appeals, for essentially the same reasons set forth in McAvoy, that the WCAC has the implied authority to dismiss appeals for noncompliance with § 862(2).

III

We affirm the decision of the Court of Appeals affirming the order of the WCAC dismissing McCord's appeal because § 862(2) and Rule 1904(6) required McCord's insurer to continue to provide medical benefits awarded by a magistrate during the pendency of an appeal until a different order was entered by a magistrate, the WCAC, the Court of Appeals, or this Court. Rule 1904(6), paralleling § 862(2), provides in effect that the insurer's filing of an application to stop or limit its liability does not operate as a stay, but entitles the insurer to expedited treatment.

Nor do we find the award to be ambiguous because it does not spell out the precise treatment that is within the ambit of "any and all reasonable and necessary medical expenses related to plaintiff's back et sequelae." Four doctors, three of whom were specialists who had treated Garcia and one of whom appears to have coordinated the treatment, testified concerning their findings and the treatments they had administered. Their testimony provided context for the language of the order, "reasonable and necessary medical expenses related to plaintiff's back et sequelae." McCord'sinsurer was obliged to "continue to provide," until a different order was entered by a magistrate, the WCAC, the Court of Appeals, or this Court, treatments for Garcia's back that were similar to those that her physicians, before the award, had provided as described in their testimony.

Magistrates do not ordinarily, if ever, spell out in an initial award of worker's compensation the particular treatments to be administered by an injured worker's physicians. The hearing, as here, may have concluded over a year before the award was entered. The patient, as here, may have moved from one physician to another. Different physicians often recommend and administer different treatments for the same ailment. The worker's condition may have worsened or improved, requiring a change in treatment. A magistrate's award cannot properly be faulted as ambiguous because it does not spell out the precise treatments to be administered in the future by the worker's physicians.

A

Section 315(4) provides that a worker's compensation insurer shall not pay a provider of medical services for any excessive charges or unjustified treatment, and that a provider shall return payments for excessive charges or unjustified treatment. *fn20 Section 315 further provides that fees and other charges for medical treatment of injured workers shall be subject to rules promulgated by the Department of Management and Budget. *fn21 Health care services rules were so promulgated, and provide a process for resolving disputes between insurers and providers. *fn22

We agree with the Dissenting Judge that § 315 contemplates that worker's compensation insurers will police compliance with health care services rules by withholding payment when they conclude that the charges are excessive or the treatment is not necessary. When a dispute arises, it is to be resolved according to the dispute resolution provisions. Ordinarily, disputes are resolved without a hearing, sometimes through mediation, and, in a relatively small number of cases, following a hearing.

Seventy to eighty percent of all claims are paid voluntarily by worker's compensation insurers or self-insured employers. *fn23 In those cases, the procedures set forth in subsections 1 through 5 of rule 1904 *fn24 for resolving insurer/provider disputes are applicable, and the insurer may, indeed, withhold payment until the dispute is resolved in accordance with those procedures.

When, however, compensation and medical benefits are not paid by the insurer or self-insured voluntarily, subsection 6 of rule 1904 contemplates that, after an award of compensation and medical benefits has been entered by a magistrate, the insurer or a self-insured employer will provide medical benefits until another order is entered by a magistrate, the WCAC, the Court of Appeals, or this Court, relieving the insurer or the employer of its obligation to make payment.

Where benefits are not paid voluntarily, and benefits are awarded, a number of years generally will have elapsed between the injury and the entry of an award. Section 862(2) provides that medical "benefits accruing prior to the award shall be withheld until final determination of the appeal." It is thus only in the relatively smaller number of cases in which a magistrate enters an award and a dispute arises concerning medical benefits accruing after the award that the insurer is required to make payments and cannot withhold payment until an adjudication of disputes that arise after entry of the award.

The strictures of subsection 6 of rule 1904 harmonize the language added by 1985 PA 103, providing that an appeal to the WCAC "shall not operate as a stay of providing medical benefits required by the terms of the award," with the earlier enacted language of § 315, providing that a health care provider shall not receive, and an insurer shall not pay, charges deemed by the carrier to be excessive or for unjustified treatment.

B

In the instant case, McCord, a year after the magistrate's award was entered in 1990, filed, on January 8, 1991, a "petition to stop benefits," on the basis of reports of physicians who had examined Garcia in November, 1990, asserting that further medical treatment was not reasonable or necessary.

This, thus, is not a case in which an insurer asserted that a particular treatment was unnecessary or that a particular charge was excessive, or even that ambiguity of an award left it in doubt regarding the extent of its responsibility. In the instant case, McCord's insurer asserted, rather, that no further medical treatment was necessary. Section 315 and the health care services rules do not contemplate that an insurer, after an award has been entered, can withhold all payment for medical benefits absent a determination by a magistrate or an appellate tribunal that no further medical treatment is necessary.

If an insurer, simply by filing a petition to stop benefits, could deny a worker--found by a magistrate after a full hearing to have been disabled and entitled to compensation and medical benefits--payment of medical benefits until another hearing and determination by a magistrate or an appellate tribunal whether further medical treatment was justified, § 862(2), providing that "[a] claim for review . . . shall not operate as a stay of providing medical benefits required by the terms of the award," would be deprived in many cases of meaningful effect.

C

We do not wish to be understood as saying that the WCAC could not, in the exercise of discretion, refrain from dismissing an appeal where the insurer has timely sought a hearing--which, because of scheduling or other unavoidable difficulty, has been unduly delayed--respecting a claim that particular treatments, as distinguished from all medical care and treatment, are unnecessary or that particular charges are excessive.

McCord did not, following the WCAC's order ofJune 20, 1991--requiring an affirmation of the bills received and paid--respond by showing that it had paid all bills except specifically identified bills. McCord claimed, rather, that all charges from and after October, 1990, were unnecessary and excessive because physicians had reported to it, on the basis of examinations in November, 1990, that in their opinion no further care or treatment was justified. Although McCord's petition to stop benefits was not filed until January, 1991, it refused to pay anything at all in respect to any bill for care or treatment rendered from and after October, 1990.

Neither § 315 nor the health care services rules empower an employer to so ignore an order of a magistrate awarding medical benefits. The petition to stop benefits filed by McCord in January, 1991, was just that--a petition, not an order of a magistrate or appellate tribunal authorizing the suspension or stoppage of payment for all medical care or treatment.

We conclude, on the facts and circumstances of this case, that the WCAC did not abuse its discretion in dismissing McCord's appeal.

Affirmed.

Charles L. Levin

James H. Brickley

Michael F. Cavanagh

Patricia J. Boyle

Dorothy Comstock Riley

Conrad L. Mallett, Jr.


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